Republicans offer deal on debt mess

Two senior Republicans say they may be open to raising new government revenue as part of a deal to resolve the dispute over the federal debt ceiling, but they warn that there is little time to enact a comprehensive accord.

John Cornyn of Texas said on Sunday he would consider eliminating some tax breaks and corporate subsidies in the context of changes in the tax code, provided there was not an overall increase in taxes.

“It’s clear that the Republicans are opposed to any tax hikes, particularly during a fragile economic recovery," Senator Cornyn told Fox News Sunday. “Do we believe tax reform is necessary? I would say absolutely."

But he insisted that any changes in taxes be “revenue neutral", meaning that the government would not take in any more money from individuals or businesses than it did now.

John McCain
of Arizona said he would be willing to consider some “revenue raisers" as part of a broad deal, but he refused to name specific measures.

Senator Cornyn, a member of the Senate leadership, also said Republicans would be open to a short-term deal on the debt ceiling to provide more time for a full agreement.

“The problem with a mini-deal is we have a maxi-problem," he said. “The big problems aren’t going to go away if you cut a mini-deal. All it does is delay the moment of truth. And so I’d say, better now than then. But if we can’t, we’ll take the savings we can get now and we will relitigate this as we get closer to the election."

The White House had no comment on the senators’ remarks. President
Barack Obama
criticised Republican legislators last week for refusing to eliminate tax breaks like those for private jet owners, hedge fund managers, multinational oil companies and ethanol producers. He said that eliminating such loopholes could save billions of dollars and help fix the short-term federal deficit and long-term national debt.

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The administration and congressional negotiators are racing to find a deal to raise the federal debt ceiling of $US14.3 trillion by August 2, when the Treasury Department says the United States will exhaust its ability to borrow money and could default on some obligations.

A bargain will have to be struck at least a week before then to allow for a Congressional Budget Office analysis and for the chambers to vote on it.

Senator McCain said on Sunday closing the tax breaks Mr Obama mentioned would have little impact on the nation’s fiscal condition and would defy the will of the voters.

“The principle of not raising taxes is something that we campaigned on last November and the result of the election was that the American ­people didn’t want their taxes raised and they wanted us to cut spending," Senator McCain told the CNN program State of the Union.

He said his fellow Republican senator from Arizona, Jon Kyl, a member of the budget negotiating team, had said there were certain measures Republicans would consider and he was open to them. He refused to name any. Senator Kyl said he would be willing to consider some increases to help bring down the deficit.

“We’re perfectly willing to consider those kinds of issues in the context of tax reform, which we would very much like to do," he said the previous week on Fox News Sunday. “But we’re not going to have the time to do it or be able to do it just to raise revenue as part of the exercise, which should be about reducing spending."